In the United States, it will take up to two weeks before your EIN becomes active and part of the IRS’s permanent records.
You are expected to wait until this occurs before you can file an electronic return, make an electronic payment, or even pass an IRS Taxpayer Identification Number (TIN) matching program.
Have it in mind that the financial backbone of any business is the employer identification number. It is needed for credit applications, tax returns and state permits and licenses. Without it, business activity and growth might stop until the number is obtained or verified.
You should apply for an EIN early enough to have your number when you need to file a return or make a deposit. Note that you can get an EIN immediately by applying online. International applicants are expected to call 267-941-1099 (Not a toll-free number).If you prefer, you can fax a completed Form SS-4 to the service centre for your state, and they will respond with a return fax in about one week.
If you do not include a return fax number, it will take about two weeks. If you apply by mail, send your completed Form SS-4 PDF at least four to five weeks before you need your EIN to file a return or make a deposit. Once an EIN has been assigned to a business entity, it becomes the permanent Federal taxpayer identification number for that entity.
Irrespective of whether the EIN is ever used to file Federal tax returns, the EIN is never reused or reassigned to another business entity. The EIN will still belong to the business entity and can be used at a later date, should the need arise.
However, always remember that EIN number is a public record, making your company vulnerable to people who care less about your business.
Some companies mistakenly think their corporate tax information is safe, so they promptly place their federal tax ID number certificate in places where anyone – customers, employees and thieves – can write the number down and use it for unlawful purposes.
Just like personal identity theft, stealing your EIN is the first step in corporate identity theft. Note that once someone gets your EIN number, he or she can establish corporate credit card accounts, business banking accounts and even establish personal credit without your knowing it.
The theft of your EIN can be combined with thieves accessing your mail. That way they can access customer checks made out to your company, deposit them into the accounts they set up under your name and withdraw the money.
In addition, another potential danger will be with employees who illegally use your EIN to obtain tax-free wholesale goods. While the employee may use her own money to pay for the goods, your company still is listed as the recipient of the products.
Indeed you may not even be aware that your employee is buying goods for personal use if she requests separate billing statements. The danger comes into play if your business gets audited by the IRS and you cannot account for these goods – or not paying tax on them – because you never ordered them.
How to Verify an EIN in the United States
The EIN is a nine-digit protected number just like a Social Security number issued by the Internal Revenue Service. Since this number is protected, verifying an EIN tend to require some level of authority. If you are not an authorized representative, you are expected to get authorization to verify the EIN.
Contact the IRS
In the United States, the IRS issues and maintains records of business EINs. Calling the IRS to verify the EIN is an option if you are authorized to obtain the information. This is usually required when an EIN was lost or misplaced, or its numbers were perhaps transposed in a document.
Authorized persons might be but aren’t limited to the sole proprietor, corporate officer, trustee or estate executor. However, if you are not an authorized representative, you can ask an authorized representative to complete IRS Form 2848 Tax Information Authorization to process it.
In a catch-22, the form requires the EIN, which means if the company has lost the number completely, the authorized company representative must call. In situations where the company has the EIN but wants to confirm it, you will know upon calling with the Form 2848 if you have the correct EIN.
Different Rules for Exempt Organizations
Even though you must be an authorized agent to verify a for-profit business’s EIN, non-profit entities are expected to maintain public records. Anyone can access this information directly from the IRS.
As such, a non-profit must provide you the EIN upon request, and you can verify this directly with the IRS on the Exempt Organization page of the IRS website. Have it in mind that the site not only verifies EINs but advises you if organizations are in good standing with the IRS.
Good standing means they are current on tax returns and filings. You can also see if the organization has had its non-profit status revoked.
Other Ways to Verify
To adequately verify the EIN of a company you are not an officer or partner in, you are expected to have a valid reason. For instance, a loan officer needs authorization to verify the EIN of the company applying for a loan.
Authorization in this case is a signed credit application that confirms the EIN with the company name, address and officer information. There are costs associated with running this type of verification.
Additionally, if you are an investor or potential business partner, you can ask a company to verify its EIN by providing previous tax returns. Note that private companies are not expected to divulge this information, but it is in their best interest when negotiating with potential partners.
Partners can also conduct a Dun & Bradstreet search. It won’t verify the EIN, but it does provide information about a company’s financial health that investors and partners are interested in.
Check Your Paycheck
As an employee, your pay check and annual W-2 should have the EIN on it. Note that you can confirm that these numbers match. The IRS can reject a tax return that has an incorrect EIN, which flags employees to confirm the number.
At this point, the payroll representative must take measures to verify and validate the EIN number so that payroll numbers are properly recorded with the IRS.